1. At this time the piecework system seems to be the most appropriate earnings system for the employees in the region. There are over 1000 garment factories in the province that use this system as the norm. If Mr. Lou were to be the first to change this system, it could cause backlash and loss of the already rare and qualified employees.

2. Pros of the piecework system in Shenzhen:

The piece work system can be cost effective for management since the company is only paying for work completed. It is easy to operate and explain to employees. The system is designed to allocate work to employees with specified skills and qualification, also the more skilled the worker becomes the more money he/she can earn. This should give the employees the drive to perfect their skill in order to increase the amount of take home pay.

Cons of the piece work system in Shenzhen:

The factory is made up of several self contained work units called production teams. These teams were made up of 10 to 15 employees with a team manager that has complete authority to assign piecework as he/she sees fit. This caused problems amongst the employees because often times the team manager ignored skills and qualifications and assigned the highest cost piecework to favored employees. Also often times there are conflict between factory owners and employees on the prices allocated for piecework. Employees complain it is to low and management says it’s too high; this is a never ending cycle. It can be more difficult to control output when employees are given the freedom to work at their own rate of production, this can also be a cause for poor quality products since employees are more concerned with quantity instead of quality.

3. Piece work can be suitable for companies that turn out large amount of items on a daily basis such as factories using assembly lines. Service companies could also benefit such as a telemarketer that is paid per call, and...

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